Posted on February 21, 2011 - by

What’s in a Food Dollar?

Source: USDA

Take a glance at your grocery bill. How much of that money do you think goes to the farmer who produced the food? Half? 70%? Actually, in the U.S., only 19% of the money spent on food goes to farmers and ranchers (USDA). And this share has been shrinking for the last few decades. The other 81% goes toward transforming these raw foods into processed products and transporting them to your grocery’s shelves.

From the National Farmers Union, here are some commonly-bought food items, their retail prices and the portion of the money that goes toward to the farmer:

Bacon, $4.39, $0.55 (12.5%)
Bread, $3.39, $0.15 (4.4%)
Eggs, $2.59, $0.74 (28.6%)
Milk, $3.99, $1.30 (32.6%)
Lettuce, $1.99, $0.37 (18.6%)
Chips, $3.99, $0.09 (2.3%)
Beer, $6.29, $0.10 (1.6%)

Intuitively, it makes sense that farmers would receive less of the retail price if the food is heavily processed, since there would be higher labor, packaging, transportation and marketing costs. Hence, a bag of Lay’s and a bottle of Coke do not return much financially to farmers, but instead go towards manufacturers and retailers.

It wasn’t always like this. Between World War I and the 1970s, farmer share hovered around 40% of dollars spent. But since then, the proportion has fallen steadily to its current levels (Farm Aid).

Meanwhile, the amount we spend on food has been declining for years. Americans spend just 10% of their income on food, the lowest proportion in the world. Of that money, 58% was spent on food eaten at home, and 41% was spent on food purchases outside of the home (Alabama Farmers Federation).

How do you make sure your money goes to the people who deserve it? Leapfrog over the middlemen, and purchase directly from farmers markets and through CSA shares. Eat at restaurants that source their ingredients directly from farmers and support the local economy. Buy foods that have little or no post-harvest processing—you’ll also benefit from eating fewer additives and preservatives.

What other ways can we circumvent the globalized production and distribution of the food system?

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